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Does Europe’s tech scene enjoy self-bashing?

Recently, I’ve noticed a new flood of negativity building up in Europe’s startup scene. Sure, the Euro isn’t doing particularly well and France (and apparently Will Smith?) is a little uneasy with what François Hollande’s government has in store. And Europe isn’t culturally as over-the-top optimistic as its transatlantic neighbor. Still, sometimes it feels like Europe’s tech scene enjoys a bit of self-bashing, whether it be about entrepreneurs’ incapability to “dream big” or VC’s ROI.

Here’s Will Smith proudly supporting François Hollande’s proposed 75% tax on annual income of over 1 million euros.

“Europeans lack ambition.”

GigaOm’s Bobbie Johnson published an article earlier this week that got off to a bit of a gloomy start, with standard stereotypes of “Europe is risk averse, Europe is short on capital, Europe doesn’t have enough big successes to build on.” Really?

But I’ll have to say that my favorite part of the article was the title: “Europe doesn’t lack ambition, but some Europeans do.” Uh…right. But unfortunately, Johnson isn’t the only one thinking this. I can’t help but ask how this is any different from anywhere else in the world, please? I’m not going to name any names but I can tell you from experience that there are definitely unambitious American entrepreneurs too. Turns out, they’re just better at marketing.

The US cares about Europe, too.

As Johnson later points out in his article, not all Europeans are looking across the Atlantic wishing they were in the US. In fact, Europe – while it may still not be home to pre-revenue companies like Instagram that get swallowed up for $1 billion – has made tremendous progress in the last few years. And here are a few of the big successes from Europe’s tech scene to prove it.

Americans enjoy Europe for the high speed rail? Not a startup but still tech!

But while Europe should also not forget that the US is also interested in what happens over here. Numerous American startups – like Airbnb, Uber, Twitter, Netflix, Eventbrite, Foursquare and Fab – have also started to look to Europe, with many of them putting Europe on the top of their international expansion list. Plus, Airbnb, Twitter and Fab have even made acquisitions of European companies. Since when is that not to like?

Invisible investing?

In addition to the debate about whether or not European entrepreneurs lack ambition or not is the issue of Europe’s VCs. Atlas Venture’s Fred Destin who once proudly waived the flag to mark the arrival of the European Super Angel published a piece in The Kernel last week properly questioning the future of venture capital in Europe.

He correctly noted that there are more and more initiatives in Europe that rely on public money – which has more or less always been the case in France. Prior to the arrival of funds like Kima Ventures, accelerator programs and even crowd funding platforms, entrepreneurs in France were dreaming up innovative ways to get ahold of the money they needed. Still, a majority of them were turning to grants and para-public bank, OSEO, as their only hope. Now the French government also has 2 funds that directly compete with local VC funds that are already raising less than before. (I’ll have to do another post on this whole ordeal, stay tuned.)

Wow, you’re an entrepreneur?

Still, governments are now starting to tune in to entrepreneurship and are finally recognizing its value for economic growth. While setting up funds that directly compete with VCs and proposing 75% taxes on anyone who actually makes it to Zuckerberg status isn’t particularly encouraging, there are other initiatives that prove that this is potentially all part of the learning process. Tax incentive schemes encouraging wealthy individuals to become business angels and invest in startups is just one of many examples that can be seen in multiple European countries.

Plus, while European students traditionally dream of working in large, monster-like corporations, it’s now becoming trendy to become an entrepreneur and work for a startup. This is a huge shift in the mindset.

It’s hard to sit back and watch these negative articles about Europe’s tech scene be published time and time again without wondering if Europe enjoys a bit of self-bashing. After all, the American ecosystem doesn’t collapse on itself or have an existential crisis every time it hits a bump in the road, why should we?

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16 thoughts on “Does Europe’s tech scene enjoy self-bashing?”

I’m French entrepreneur who lives between Paris and San Francisco (6 months a year)… I think the real problem is not “Europe doesn’t lack ambition, but some Europeans do” but “A lot of Europeans have ambitions but Europe doesn’t”.

Politics, Elites… doesn’t really recognize the value of Entrepreneurship and startups for economic growth. They pretend to help innovations the same way they pretend help the culture. For me, they just make some initiatives just to pretend they do something.

The majority of the elite and even VCs help and invest in companies when they start to succeed (growth or late stage)… they don’t have the bootstrapping culture (just see their portfolio).
They don’t imagine that a small company can become really big if they don’t see a huge market proof. Europe has a lot of talents (I think more than anywhere else), but still doesn’t understand the importance of building a real ecosystem and more important VCs doesn’t invest in Game Changers that can disrupt the economy.
That’s why, I think maybe it’s now becoming trendy to become an entrepreneur and work for a startup in Europe… but the real question is “Does Europe have the real ambition to build a strong ecosystem to support its talents to build the next Google, Facebook or Twitter and become a world tech leader ?”.

Right now… I just see few initiatives and a lot of discussions about it… not real fact.

Thanks very much for your comments – I think you are correct in some respects. I think European politicians are very distinct from the business crowd – for example, in France, many politicians come out of Sciences Po and l’Ena and don’t have business training or experience. This definitely makes it far more difficult when trying to initiate new policies to encourage and promote business.

And European investors come largely from financial backgrounds and not entrepreneurial backgrounds as in the US.

That said, I do think that it is changing. I think politicians are clearly recognizing that entrepreneurship is critical for the development and the future of the economy. They’re definitely taking baby steps and a there is a little bit of trial and error involved, but I do see positive changes taking place.

But I also find that the ecosystem itself likes to jump to quick conclusions. Why are European entrepreneurs coming out and saying that their neighbors lack ambition? It just seems weird to me. Even though you find plenty of unambitious entrepreneurs in the US, this never comes up as a topic for discussion regarding the whole population.

Not every entrepreneur starts out in the millions of Euros category, many app developers are simply 20-somethings working from Starbucks. VC funding, high taxes dont really factor in, nor deter the coders…

Julien is right about the VC spirit about already proven market investments.
The culture, especially in France (already the case since ten years in Germany) is changing you’re right. When i see people reactions when i tell i am an entrepreneur, it’s always : whooa, i have ideas too, but i never tried…

Anyway, most important: the new french tax rule of 75% WON’T be applied to founders that sold their company… Hollande told 2 entrepreneur two months ago, it will be taxed normally like an expectional revenue. Please spread the word to avoid misunderstanding.

I am a french entrepreneur in Geneva (CH) and i really believe the startup scene is moving quite fast since 5 yrs, but it also has kept its european style, what i admire. I think from this side of the atlantic, people will talk and love game/rule changers, paving the way for new way of living, more than billions euros of valuation…

It enters the “exceptional revenue” part of the 75% thing. That’s something Hollande explained to Soccer players : the revenue they make during their 10-year career can be smoothed over a normal 40-year professional life. Sure if they keep making over 1-million a year after that, they’ll have to pay. So yes if you’re called Zuckerberg in France, book a thalys ticket :)

To add to this post, what I said earlier: I think many people misunderstand the 75% Tax? It’s my understanding that such French taxes are based on the net (the leftover revenue after accounting for all business epxenses, office rent, salaries, office costs etc). This netto amount is after all costs and salaries are already paid. Employees have their paychecks, social charges already paid, office rent, telephone, etc all done. Not 1 person I know here in San Francisco/Silicon Valley cares at all about the company’s income tax percent after all costs are paid, to decide whether they should be in business or not. Its a strange, bizarre reason or just an excuse to not start their own company?

Even if this 75% tax apply to entrepreneurs, I don’t think it will have an effect for all of them. Take the first time entrepreneur in its early 20′ : do you know any of them who decided not to launch a start-up because of fiscality. Most successfull entrepreneur will tell you they were not aiming at becoming rich, just wanted to change the world, achieving their dream or else. Fiscality may be an issue for serial entrepreneur (et encore !) but not for the next Zuckerberg :)

To be clear, the tax of 75% is a joke, i show you:
1/ It’s not over 1M€ revenue, it’s over 1M€ fiscal revenue. To know your fiscal revenue, you divide the sum of revenue of the familly by number of people (called “part”). Ex: husband+wife+2M€ revenue = 1M€ fiscal revenue
if you have childrens it’s similary.
husband+wife+3 childrens = 4 “part” (the first children and second count for half), that mean you must earn more than 4M€ to be impacted by the 75% tax …

In France, you have two options: pay tax or have childrens XD
(be alone is double punished here: 1/ you’re alone; 2/ you have to pay for)

2/ the money earned in investissement, real estates,… is taxed by other laws, then the 75% tax don’t include the “Wall Street money”.

But anyway, if you pay yourself 2M€, you don’t must think to tax, you must think to yours employees !!!! Do you prefer give 1M€ to your employees or keep this money for you ??? If you keep this 1M€ and say “i don’t succeed alone, my employees have the majority of this success” …. it’s a lack of honor, you must be punished !!

In our field (transport, mobility), I can only say that Europe is far ahead and many American startups are contacting us for advice.
The best working environments I have experienced are the ones that manage to combine both Europe and US strengths.